Letter From the Editor
Welcome to the Spring 2017 Issue of Cornell Business Review. It is my honor to present to our readers what I believe to be our best issue yet.
Since its inception in the Fall of 2010, Cornell Business Review has brought together creative and entrepreneurial students to provide
readers with timely, investigative articles. Focusing on both Cornell and business around the world, our goal from the start has been to
encourage students, faculty, and the Cornell community to “Join the Conversation.”
Our work this semester has been a reflection of that continued pursuit. With 35 members divided into Business, Editorial, and Design
teams, we completed one of our most ambitious projects yet— CBR Now, a weekly newsletter with interviews, articles, campus events, and
more. To our delight, our subscriber base has grown immensely over the semester, and we hope to continue expanding our
audience.
In the 14th issue of the Cornell Business Review, we cover a myriad of topics, including the increasing presence of
algorithmic trading, political activism in the modern era, the rise of subscription services across different industries,
and the use of drones for animal conservation.
In addition, we had the privilege of interviewing two prominent alumni and two current MBA student entrepreneurs.
An exclusive interview with Robert F. Smith, Founder and CEO of Vista Equity Partners and Cornell Entrepreneur of
the Year, discusses the climate for entrepreneurship and artificial intelligence. We also feature Eva Papoutsakis Smith
(Senior VP of Sales Strategy and Operations at Integral Ad Science), Ziad Jarjouhi, and Serdar Mizrakci (Co-Founders
of PureSpinach).
We would like to thank Cornell for its financial support, our advisor Deborah Streeter for her consistent
guidance, and our Alumni Board for their continued involvement. Further, we greatly appreciate Robert
F. Smith, Eva Papoutsakis Smith, Ziad Jarjouhi, and Serdar Mizrakci for giving our readers thoughtprovoking and insightful interviews.
Finally, I would like to extend my gratitude to our wonderful members. This magazine and CBR Now
would not be a reality were it not for their continued ambition and resourcefulness.
Before starting my tenure as Editor-in-Chief, I workshopped some recruiting materials with the
Executive Board. We came up with a number of ads and taglines, but one of them stuck: “write an
excellent read.” Now, as the semester draws to a close, I am confident that we have done exactly that.
Happy reading!

Bjorn Bjornsson
Class of 2018
Editor-in-Chief

Table of Contents
Government

3

POCKETBOOK PROTESTS
by Andrew Billiter

5

COLLEGE ADMISSIONS
SCARE
by Nikhil Dhingra

Industry

9

10

by Eric Reuben

by Josh Thompson

THE NEW ERA OF SHOPPING

LEANING OUT

7

WHAT'S SO SPECIAL ABOUT
CUBAN HEALTHCARE?
by Ignacio Garcia Conway

11

FOR-PROFIT FORECAST
by Leora Katzman

Finance

13

THE NEW KINGS OF
WALL STREET

15

BALANCING ACT
by Cameron Griffith

17

DISAPPEARING ACT
by Hamish MacDiarmid

by Jeremie Mutolo

Technology

19

VENMO: VIRTUE OR VICE?
by Lillian Wang

21

FROM A CHAIN TO AN ECOSYSTEM
by Nolan Abramowitz

22

AN EYE IN THE SKY
by Catherine Wei

Exclusive Interviews

23
PURESPINACH

27

ROBERT F. SMITH

32

EVA PAPOUTSAKIS SMITH

Pocketbook Protests
by Andrew Billiter

Since his stunning electoral victory in November,
the opening months of President Donald
Trump’s administration have been marred by
internal scandal, allegations of unprecedented
foreign influence, and vigorous resistance
from the judiciary, federal officials, politicians,
and countless protesters across the nation. As
the battle lines are drawn in Washington and
Democrats and establishment Republicans
gear up for total war with the administration, a
new breed of online activists targets Mr. Trump
where it hopes will hurt him most: his cherished
brands.
The political landscape of the 21st century, where
social media and a network of partisan digital
outlets serve as middlemen for the nation’s
debates, news, and constituent communication,
has led to the spectacle of competing hashtags
and online feuds between supporters and
opponents of the Trump Administration.
Leading the charge against the Trump brand
is #grabyourwallet, a social media campaign
developed shortly after the release of videos
featuring Donald Trump describe sexually
assaulting women, which has since become the
leading exponent of retail resistance. The related
website, grabyourwallet.org, lists 55 companies
that carry Trump products, with ten prioritized
and the rest sorted “From Most Boycott-Able to
Least.” The website does not explain how these
rankings are determined. So far, the movement
has several notches on its gun belt: the website
lists 22 companies it delisted after pulling Trump
products, although the list also notes that some
of the targeted vendors operate under flash sale
models and may not have permanently featured
Trump products to begin with.
While Grab Your Wallet positions itself as
the heart of the anti-Trump retail movement,
it is perhaps just the best-known of a loose
confederation of groups, websites, and

individuals motivated by a shared hatred of the
45th president. On Facebook alone, there are
dozens of groups and pages named with some
variant of “Boycott Trump,” and behemoths—
ranging from individuals like George Takei to
the nearly 4 million member strong “Pantsuit
Nation” group—routinely share news of the
boycotts and their apparent effects on Trump
businesses. On the other side of the political
spectrum, Trump loyalists have mounted their
own campaigns, most prominently against
Starbucks after the coffee conglomerate
announced a plan to hire 10,000 refugees.
While financial fallout from this decision is
unavailable, Credit Suisse reported a sharp drop
in the company’s brand perception following the
announcement, and the company appeared to
moderate its position when it announced plans to
accelerate their planned veteran hiring initiative.
However, the Starbucks saga appears to be more
of an isolated incident next to more widespread
anti-Trump sentiment. While Trump supporters
may damage liberally-inclined brands, it appears
they cannot effectively counteract the dollar
diplomacy of anti-Trump factions.
The highest-profile casualty of the boycotts,
after Kellyanne Conway (who has been largely
exiled from network television after playfully
promoting the brand in casual contravention
of federal law), has been the Ivanka Trump
brand, which has the dubious distinction of
being skewered by Saturday Night Live and
removed from the shelves of several retailers.
However, it is difficult to quantify the damage
Grab Your Wallet has wrought, and even more
so to determine the movement’s effect on the
president himself. President Trump’s finances
exist under a veil of secrecy, and emphasizing
the effect of specific boycotts on the president’s
profits risks confusing causation and correlation.
That said, retail analysts observed a 26 percent
drop in year-to-year performance in Ivanka

Page 3

Trump online sales—a steep decline that appears
inseparable from the intense backlash against
her father and his policies.
While the boycotts of Trump products seem
to cause financial damage, they have not
spurred any policy changes or concessions
from the administration. President Trump has
demonstrated that he keeps a close eye on the
family brands and is sensitive to attacks on their
image, but has steadfastly refused to backtrack
on any of his public positions. Boycotters can
join the Democratic Party, Senators McCain
and Graham, the Central Intelligence Agency,
and the judicial branch on the list of entities
that have tried, and failed, to moderate the
President’s positions. Ivanka Trump herself, the
figure most closely associated with the targeted
brands, appears unaffected by the vigorous
boycotting and will soon join her father in the
White House as an informal adviser.
This is not to say that the leaders of these
boycotts feel defeated or unfulfilled: from their
perspective, hurting the Trump brand and

"As the battle lines are drawn in Washington and Democrats
and establishment Republicans gear up for total war with the
administration, a new breed of online activists targets Mr.
Trump where it hopes will hurt him most: his cherished brands."
cutting into the family’s profit, to any degree, is
a victory in of itself. A social movement born of
a hashtag reflects the digital culture that brought
President Trump to office in the first place.
When the vox populi is heard online more than
in town halls, and when the president’s own
social media habits are infamous, the politics
of image and simply making a statement have
become increasingly important even in the
absence of substantive effects.
Despite the “Never Trump” and “Not
My President” rhetoric, a complete
Trump boycott would be difficult and,
in some places, highly impractical.
Cornellians can sympathize, as
students and Ithacans would likely
have a hard time without shopping at
Wegmans or Amazon, both of which
Grab Your Wallet targets for selling
Trump products. The controversy

over the Trump brand also puts retailers in an
awkward position; they face pressure from both
Trump opponents and Trump loyalists, the
latter condemning decisions to remove Trump
products as submitting to left-wing bullying.
Retailers who remove the Trump brand can
frame their decisions in purely economic
terms, although the extent to which Trump
supporters see this as thinly-veiled appeasement
to leftist agitators is unclear. So far, retailers have
explained that the Trump brand owes its removal
to its inability to sell, and the Ivanka
brand’s slumping sales reinforces the
move as a sound business decision,
not just saving face. Regardless of
its sincerity, this explanation is an
option unavailable to similarlyembattled politicians and public
figures who have to work through
the political calculus of appealing
both to hardline Trump supporters

and establishment Republicans in their districts
Setting aside concerns about efficacy, some
opponents of the president fear that boycotts
of Trump products may satisfy people’s urge to
“do something” and, feeling that they have done
their part to combat the administration, make
them less likely to engage in more involved
activities such as volunteering for campaigns
or even voting. While the 2018 midterm
elections will largely determine if the outrage
seen so far is the first sign of a great awakening
of political activism, retail boycotts, with their
comparatively low barriers to entry, show little
sign of flaming out. What remains to be seen is
the extent of the damage, and if this particular
flavor of crowdsourced retail retribution will
become a go-to form of political activism in
an increasingly digital and hyper-partisan
landscape.

Decision Day, the nerve-wracking conclusion
to high schoolers’ college searches, has
always been a socioeconomically bifurcated
process. Wealthy students equipped with
private testing tutors, admissions counselors,
and test-preparation programs often have a
much better position than those that are not
so fortunate. However, the introduction of
test-optional schools may shift this trend; less
focus on standardized testing, which typically
favors high-income students, could mitigate
the role of money in university admissions.
Critics retain concerns of this transition,
such as the SAT’s importance in highlighting
certain skills in a student’s application and
that test-optional policies may fail to diversify
the student body. But schools continue to
embrace test-optional policies as a more
effective tool of measuring a student’s college
readiness and breaking down socioeconomic
barriers to educational opportunities.
For many affluent students, the admissions
process has been paved by the benefits of
their parents’ wealth. Due to the oftentimes
heavy weight that admissions officers place
on standardized tests, money spent on testing
programs tends to improve a student’s chance
at acceptance. In addition, many well-off
parents hire former admissions officers to
proofread their child’s application and ensure
that it is tailored to the highest standards.
Since admissions officers sometimes fail to
account for the difference in resources that
students have in preparing for these tests,
wealthy students already have an advantage
in this crucial part of the admissions process.
Critics of American higher education argue
that the admissions process boils down
to income discrimination. For example,
colleges consider a student’s “demonstrated
interest” in the school, which may involve an
expensive flight out to the campus for an onsite visit. Additionally, heavy weight placed on
early decision admissions puts low-income
applicants at a disadvantage. Students who
must weigh financial aid packages cannot
easily commit to a school based on preference
alone, keeping them from an applicant pool
enjoying acceptance rates far higher than
general admission. For students who sign
an agreement committing to a school upon
their acceptance, their chances of admission
raise significantly since the school knows it
is a student’s first choice. Lastly, a focus on
weighted GPAs hurts students living in lowerfunded school districts with less access to AP

and IB courses.
These admissions criteria have contributed
to financially skewed student bodies at
many universities. The number of Pell
Grants to low-income students rose only
1 percent from 2000, further entrenching
the socioeconomic disparity. Lower-income
students are further dissuaded from applying
to selective universities in a process called
“undermatching,” where misinformation
on financial aid packages and the increased
costs of elite colleges tends to deter highly
talented students from applying to selective
schools. As a result, students from households
in the bottom income quartile compose
only 3 percent of the enrollment at the most
competitive colleges in the United States.
In an attempt to counter this trend, many
experts recommend that selective universities
follow public colleges’ lead by emphasizing
low-income preferences as a consideration
within the admissions process. Critics of
the current admissions system argue that by
factoring income status into the admissions
process, selective colleges will be able to tap
into a larger pool of high-achieving students.
Although experts disagree on the best
replacement, they generally agree that schools
should incorporate socioeconomic status in a
way that does not lower admission standards,
but rather uses proactive efforts to recognize
high-achieving, low-income students.
At the center of this debate lie test-optional
schools. In recent years, more colleges have
welcomed the idea of forgoing standardized
test scores during the admissions process.
Instead, colleges ask for graded writing
samples or place more weight on other
aspects of an application such as the rigor
and achievement within their courses. For
these schools, a high standardized test score
will usually not outweigh an otherwise weak
application.
As of 2015, 47 new colleges announced testoptional policies, raising the number of testoptional schools to over 850 in the United
States. Forty-six percent of the top tier liberal
arts colleges no longer require tests, and those
who drop test requirements typically see 250
new applicants on average. While students can
still submit test scores to these universities in
place of a graded assignment, both will be
assessed individually and will contribute to
different aspects of an admissions officer’s

Page 6

evaluation of the student. The new applicant
avenue does not appear to lower admissions
standards. According to a study of 123,000
students conducted by William Hiss, the
former Dean of Admissions at Bates College,
there were no significant differences in
graduation or cumulative GPA rates between
the applicants who submitted test scores
and those who opted out. The study found
instead that non-submitters of test scores
were more likely to be lower-income and or
first generation minorities, suggesting that
removing standardized testing requirements
reduces the “undermatching” effect.
However, not everyone promotes this
movement towards test-optional policies.
David Z. Hambrick, an Associate Professor
of Psychology at Michigan State University
and vocal critic of test-optional policies,
argues that the SAT “works for its intended
purpose—predicting success in college.”
While Hambrick acknowledges the SAT’s
flaws, he references a study conducted by
the University of Minnesota concluding that
the SAT can predict a student’s college GPA
just as well as a student’s high school GPA
can. In addition, a separate Vanderbilt study
found that the SAT can help predict outcomes
in life that extend well beyond college years,
validating its use as a metric for general
academic performance.
Previous studies regarding the validity of testoptional policies also face scrutiny. In fact, a
study conducted by Andrew Belasco, CEO of
college consulting firm College Transitions,
concluded that there exist few, if any,
significant gains to low-income and minority
students through test-optional policies.
While test-optional admissions are not the
perfect solution to an ever-growing wealth
disparity among America’s students, they do
offer the potential to promote egalitarianism
at elite colleges. Rather than pour more
funds into test preparation programs, these
progressive policies could help tackle the
admittance rate gap between rich and poor
students, ultimately resulting in more diverse
admitted classes. While removing the SAT
from the admissions process has its flaws,
an improved version of test-optional policies
could offer lower income students greater
opportunities to reach their fullest potentials.

What’s so special about

Cuban Health Care?
by Ignacio Garcia Conway

American discussions of Cuba usually resort to words like “backwards,” “communist,” and “poor” to describe the island
nation. Conversations focus on economic
instability and political oppression, emphasizing the Castro regime’s impact on
Cuban sociopolitical society. There is little
discussion on the government’s achievements, particularly those in healthcare.
In the decade following the Cuban Revolution, the government adopted a universal healthcare system based on preventive

care and research. Today, world leaders
have praised the Cuban industry for its
commitment to medical advancement and
successes in patient care. Among these
is Director-General of the World Health
Organization Margaret Chan, who stated “Cuba is the only country that has a
healthcare system closely linked to research and development.”
The government’s preventive medicine
approach consists of mandatory vaccina-

Page 7

tions and a required yearly check-up. All
neighborhoods have a corresponding primary care physician who must care for everyone in his or her assigned area. Cuba’s
abundant number of doctors makes such a
system possible. There are around 8 physicians for every 1,000 people, a little over 3
times the amount in the US. The program
has successfully reduced the presence of
disease on the island, making the main
causes of death related to alcohol, tobacco and obesity. This profile is unusual for

a country with Cuba’s economic development, as it shares wealthy countries’ common problem of death by heart disease,
diabetes, cancer and stroke. As part of its
preventive care program, the Cuban government started an education initiative to
inform people about non-disease related
deaths. Moreover, it established research
initiatives to combat fatal contagious illnesses.
On June 2015 Cuba became the first country in the world to eliminate mother-tochild transmission of HIV and syphilis
thanks to the scope of its healthcare program. Primary physicians

and gynecologists give special attention to pregnant woman
in order to prevent costly
complications and provide
proper treatment if they do test
positive for HIV or syphilis. Furthermore, the government’s focus on research
led medical professionals to develop a
treatment for diabetic ulcers in the feet
known as Heberprot-P, alternative cancer
treatments, and Nimotuzumab, a treatment for late stage tumors in the head and

neck.

expectancy garnered praise from interna-

Advancements such as these attract a large
number of health tourists to the island.
Cuban doctors tend to patients from all
over the world who come to receive treatments that are not found in their respective countries. The Cuban government’s
shockingly low physician salary provides
doctors with an incentive to work in private-international hospitals. Government
leaders use its health services, specifically
medical staff, in negotiations with other
states. For example, Cuba provides Venezuela with medical staff in
exchange for cheap oil,
which Cuba later can re-sell for
cash. Unfortunately for Cuba,
Venezuela’s economic and political catastrophe
created complications in this system of trade.
Although the Cuban
government
is dedicated to the
universal well-being
of its citizens, the economic strain forces the
island to spend a smaller
portion of its resources
on healthcare than the
United States government. Cuba devotes 11.1
percent of its GDP to the
health industry, spending
an average of $2,475 per
person. The United States
spends around 18 percent of its GDP, averaging
around $9,500 per person.
Yet, Cuba’s smaller investment has not proven disadvantageous. The island’s infant mortality rate is 4.5 deaths per 1,000
people, 1.3 fewer deaths than that of the
United States. At 77 years, male life expectancy is the same in both countries while
females’ life expectancy is only one year
longer in the United States. Although the
healthcare program’s ability to maintain
a low infant mortality rate and high life

Page 8

tional medical professionals, the program
has not escaped the stresses of the island’s
poor socioeconomic conditions.
In March 2014, the Cuban city of San Miguel de Padron suffered an outbreak of
hepatitis A due to water contamination. A
few months earlier, floods led to increased
urbanization in La Habana, causing a rise
in cases of certain contagious diseases. The
program’s failures root themselves in the
government’s inability to provide sufficient
funds for quick or emergent care. People
must wait weeks to get prescribed tests
and medicines as pharmacies’ low supply
of essential medicine further strains patient care. Many Cuban hospitals rely on
foreign aid to re-stock their pharmacies
and equipment. The 1960 U.S. embargo on
exports to Cuba further limits the government’s ability to purchase medicine and
medical equipment predominantly found
in the United States, leading doctors to
push for reform.
Cuban doctors are hopeful that better relations with the United States and a possible
end to the embargo will fix the gaps of the
island’s healthcare. An influx of American health tourists would increase medical profits and investment opportunities.
Yet, shifting focus towards more profitable
health tourism might displace physicians’
priorities away from public services. The
program’s primary concern, though, is its
ability to stay afloat as the Cuban economy
avoids full-on collapse. With an uncertain
future, Cuba’s celebrated healthcare system is threatened by socioeconomic limitations as it awaits economic or political
reform.

The New Era of Shopping:
Subscription Services
by Eric Reuben
While subscription services have traditionally been
restricted to gym memberships and magazines,
subscribers are now receiving beauty products and
groceries shipped to their door. Subscription cosmetics
and groceries have grown in popularity, especially
among millennials. Blue Apron and Birchbox are
pioneers in the trend toward subscription services
and have successfully differentiated themselves from
traditional E-Commerce retailers. The now saturated
marketplace of retailers offering subscription groceries
and cosmetics is increasingly comprised of industry
giants and startups. The introduction of subscription
services forces retailers to evolve and will change the
way consumers shop.
While E-Commerce has been one of the fastest
growing industries in the past five years with an
annualized growth rate of 10.1 percent, growth is
expected to slow to a modest 4.4 percent in future
years. In order to sustain a profitable business in a
declining revenue growth environment, differentiation
is necessary. Subscription cosmetic services have
been successful thanks to their ability to differentiate
themselves from traditional E-Commerce and
brick-and-mortar retailers. While the $56.7 billion
industry is still dominated by traditional retailers
such as L’Oreal and Procter & Gamble, startups have
acted as disruptors. For a recurring fee, companies
like Birchbox and Glossybox deliver beauty boxes
each month to subscribers’ front doors filled with
luxury sample-sized makeup and skincare products.
The creative packaging and unique business model
provide subscribers with a memorable experience
without having to walk into a store. Boxes contain new
products each month that are creatively aligned and
decorated with materials such as colorful tissue paper.
The target market is primarily millennial women
who do not have the time to visit boutique beauty
shops but value the convenience, quality, surprise,
and customization of the service. Utilizing a variety
of sample-sized products from different brands helps
attract millennials, a generation that values access and
variety. The popularity of subscription boxes is more
than a fad; Birchbox has accumulated over a million
loyal subscribers, and Glossybox reached a quarter
million.
Birchbox’s scale and creativity have transformed
and inspired the way consumers shop for cosmetics.
Startups such as Glossybox, JolieBox and Ipsy entered
the market within two years of Birchbox’s founding in
2010. In an effort to play catch-up, industry giants such
as Target, Walmart, Men’s Health, Allure, and Sephora
have also begun offering beauty boxes. Subscription
shopping has become such a large part of E-Commerce
that 10 percent of online shoppers have signed up for a
subscription service. The growing popularity of beauty

to grow to $6 billion by 2020. Though meal kit services
are estimated to grow in market share, grocery giants’
offerings of meal kits make it difficult for new startups
to enter the market and become profitable.

boxes will impact the profitability of brick-and-mortar
cosmetic and beauty retailers, an industry expected to
experience no revenue growth over the next five years.
An oversaturated marketplace will also lead to further
consolidation, innovation, and cost reduction. For
instance, Birchbox cut 15 percent of its employees in
January 2016, invested in automating its factories, and
recently bought out JolieBox, a subscription cosmetic
retailer based in Paris. While beauty boxes are here to
stay and have transformed the way we shop, it is likely
too late for startups to enter the competitive market.
Just like subscription beauty services, subscription
grocery services have also soared in popularity and
disrupted their industry. Blue Apron, which was
founded in 2012, delivers ingredients and recipes
in the form of meal kits to 8 million subscribers.
Organic, locally-sourced ingredients are conveniently
pre-measured and delivered to customers weekly.
Blue Apron has continued to grow in scale since its
founding. The company received a valuation above
$2 billion in June 2016, prompting it to postpone any
plans of going public. Blue Apron’s popularity has led to
the rise of other subscription-based grocery providers
such as Plated and HelloFresh. Subscription groceries
has grown to a multibillion dollar industry. By only
using locally sourced and organic ingredients, Blue
Apron successfully attracts millennials, the generation
leading the transition toward healthy and sustainably
grown food. Millennials value the affordability, high
ingredient quality, and convenience associated with
the service. The success of startups like Birchbox and
Blue Apron has inspired industry leaders such as Tyson
Foods, Martha Stewart, and Kroger to develop their
own meal kits. Tyson Foods teamed up with Amazon
Fresh to develop Tastemakers, a meal kit service with
an educational component. According to Technomic
Research, the market for meal kit services is projected

Page 9

Even with the rise in popularity of subscription
groceries, meal kit services’ impact on grocery stores
will remain minimal. If meal kit services grow to earn
$6 billion in revenue, the industry will still remain
much smaller than grocery stores, which earned $612
billion of revenue in 2016. Specialty grocery stores,
such as Whole Foods, Trader Joes, and Wegman’s are
likely to take the biggest hit as they attract the same
type of customer that has signed up for meal kits.
Additionally, according to Cardylitics, an Atlanta
based company which analyzes credit and debit card
purchases, customers receiving meal kits only reduce
spending at specialty groceries by 7.6 percent.
While the rise of the meal kit will have a minimal impact
on grocery stores, the influx of subscription groceries
has sparked innovation in the industry. Although
grocery stores have been slow to integrate technology
into their operations, they have finally started to
innovate. In the next five years, store operators like
Kroger and Amazon will provide consumers with
never-before-seen ways to buy groceries. Kroger, the
second largest player in the grocery industry behind
Wal-Mart, is partnering with Uber to expand its home
delivery service. By 2022, Amazon is projected to rise
from the ninth to the third largest grocery provider
in the United States. The expansion of their online
grocery delivery service and development of new
business models such as Amazon Go will serve as a
catalyst for future growth. The proposed cashier-less
store utilizes sensors to track inventory and requires
customers to enter and checkout of the shop using
their smartphones. Amazon Go serves as a model for
innovation in the grocery industry and will offer meal
kits as well as standard grocery items.
While traditional brick-and-mortar grocery stores
and beauty shops still control most of their respective
markets, subscription services have grown in
popularity and served as a catalyst for innovation.
There are striking similarities between Birchbox
and Blue Apron. Both companies successfully
differentiated themselves from E-Commerce retailers,
deliver products that align with millennial trends, and
inspired other startups and industry giants. While the
scale and popularity of subscription services indicate
the trend will continue, there will also be further
innovation. Industry leaders such as Amazon will
continue to integrate technology into their business
models and ultimately change the way we shop for
groceries and cosmetics.

Leaning Out
by Josh Thompson
unused employee creativity. Leaning the production
model requires the creation of detailed process
analyses drafted from all perspectives; there should be
a clear line of communication between line workers,
supervisors, engineers, and even upper management.
The creation of a comprehensive process analysis
requires a collaborative effort from all members of
a company to promulgate a culture of efficiency in
which both employees and employers consistently
attempt to spot out waste and eliminate it from the
production process. As Jeffrey Liker, author of “The
Toyota Way,” contends, the strategy is “more a state of
mind than it is a type of company.”

Allow me, for a moment, to digress from the typical
politicized discussion of American manufacturing
and focus on statistics and strategy. According to the
Congressional Research Service’s 2016 report titled
U.S. Manufacturing in International Perspective, U.S.
average hourly compensation costs tallied at nearly
$29, significantly higher than nearly any other major
manufacturing nation. Higher costs do not correlate
with higher productivity. Since 2002, American output
per labor hour has increased by a mediocre 47 percent,
lagging far behind foreign competitors such as Taiwan
and South Korea, recording 106 percent and 94 percent
increases, respectively. This disparity has had a striking
impact on domestic employment; the country has lost
almost five million manufacturing jobs since the turn
of the millennium. The reasons for the domestic slide
are many and varied: technology, taxes, and domestic
economic shifts are some of the most frequently cited
explanations. Globalization, however, is often the first
explanation invoked in America’s public discourse.
Foreign competition boasts lower costs and often
higher productivity. While myriad solutions have been
proposed, and implemented, they lack attention to the
undesirable, the lazy, and the inefficient: waste.
While companies cannot control entire countries’ costs,
they can control the efficiency of their own processes.
Eliminating waste allows domestic manufacturers to
cut costs and compete with foreign enterprise. The
predominant strategy for streamlining is known as
lean. While the philosophy is applied predominantly
to manufacturing, it can be used to optimize any
process. The official “lean” philosophy was developed
in the late 80s from Toyota management principles
which are collectively known as “The Toyota Way.” Dr.
Edward Deming, an American engineer, management
consultant, and statistician, introduced this system
of quality control to the Japanese manufacturing
industry in the post-WWII restructuring of the
country’s economy. “The Toyota Way” focuses on
eliminating eight types of waste from the production
process: defects, overproduction, waiting, excess
processing, transportation, inventory, motion, and

I was fortunate enough to get inside of Multisorb
technologies, a top ‘small manufacturer’ in the
United States located in Buffalo, New York. Multisorb
specializes in the production of sorbent products—
desiccants, moisture regulators, oxygen absorbers,
volatile absorbers and any other item designed to
extend the shelf or service life of a good. In the Fall of
2014, the business was purchased by Summer Street
Capital, a private equity firm also headquartered in
Western New York. The firm wanted to continue
Multisorb’s history of innovation while accelerating its
international expansion and solidifying its home base.
Newly-appointed executive Eric Armenat wanted
to help the company continue to find success by
eliminating the inefficiencies of the former company
model, so he turned to the trusted Toyota Way.
Armenat and his team of consultants from Projects
Quality, a consulting firm that helps companies
implement lean into business culture, worked to
mitigate all eight forms of waste. However, the
improvement of three types of waste—waiting, excess
inventory, and unused employee creativity—appeared
especially apparent.
To start the overhaul, Projects Quality consultants
Brian Wolf and Carol Novak set out to identify
“A players,” individuals who could be trusted to
comprehend lean tactics and pass these on to their
fellow employees. Next, they set out to establish a clear
line of communication, and collaboration, between
line workers, engineers, and upper management. By
selecting “teams” composed of all occupations from
each product division (for example, a freshpax team
and a minipax team), Projects Quality solidified the
relationship between those involved in the physical
process and those who oversee it. This connection
is essential to preventing the most insidious form of
waste: unused employee creativity. Once a product’s
team was in place and all members of the local
hierarchy were granted participatory representation,
the teams met weekly to discuss process improvement.
Changes were seen immediately, and not just in the
production process. As one employee put it, “[the]
biggest thing I’ve seen happening here is a change in
attitude.”

Page 10

Excessive inventory was one of the most egregious
challenges Multisorb faced, although the teams
quickly learned how to deal with it using a common
lean practice known as Kanban. Kanban, which
underpins Toyota’s “just in time” manufacturing
system, is Japanese for “visual signal,” or “card.” This
simple technique implements a signal that alerts
employees when inventory reaches a certain point
and a new order is necessary to continue production
at the usual rate. For example, one Multisorb team
found that it needed two strips of material to finish
the product during the time that it took for a new
order to be delivered. The team eliminated any excess
inventory by ordering a smaller number of strips and
then replenishing the strips once they reached the
Kanban. Leaning out this process also mitigated other
forms of waste, such as excess processing and waiting.
This is often the case, as streamlining one inefficiency
has a butterfly effect.
For example, one action affected unused creativity,
excess processing, inventory, and motion.
When Armenat and Projects Quality first began
implementing lean, Armenat employed an essential
lean tactic: go and see. Experiencing the inefficiency
of a process is the best way to understand its solution.
Armenat went and worked a machine for an entire
shift. By the end of the day, he concluded that far too
much of his time was spent waiting to transfer material,
and even more of his money was wasted in excessive
processing and defective product. The executive called
his engineering team together and gave them one
assignment: design a consistent new machine that
eliminates waste and excessive processing. The result
was the ‘gold machine,’ which cut useless waiting out
of the production process and essentially doubled
output in a shift.
While Multisorb provides an excellent example of lean
implementation, it is by no means the first American
enterprise to do so. According to Womack and
Jones, firms have been adopting similar management
principles since the 1990s. Lean just happens to be a
particularly salient choice. A multitude of prominent
companies have adopted either lean or Six Sigma (a
later adaptation developed by Motorola engineer Bill
Smith), including Sears, Bank of America, and even
Amazon. Lean is not something that can be adopted
and forgotten;when done properly, the work is never
actually finished.

For-Profit Forecast
by Leora Katzman

For-profit colleges have an abysmal track
record, often leaving students buried
in debt with no job. During the Obama
administration, the Justice Department
clamped down on predatory for-profit
colleges that make false advertising
promises to unsuspecting students.
However, President Trump and new
Secretary of Education Betsy DeVos
have indicated fewer scruples with
privatization of the education system,
raising the prospect of a for-profit
university resurgence. Already stock
prices of for-profit colleges have surged
since Trump’s election, indicating the
market sentiment that regulation of
these predatory companies may not be
a priority in the new administration.
However, others are hopeful that Trump’s
promise to weed out fraud, abuse, and
waste will outweigh his penchant for
fewer regulations.
The for-profit tuition system is fueled
by government-backed student loans.
Without government funds, for-profit
colleges are doomed. For instance, ITT
Tech was forced to file for bankruptcy
immediately after it was barred from
benefiting from federal student loans.

According to a 2017 article in The
Daily Beast by Jackie Kunich, the forprofit college industry has developed a
reputation for “peddling bogus diplomas
and draining billions from federal
coffers.”
In August 2012, the Health, Education,
Labor and Pensions Committee of
the U.S. Senate released a report of
statistics which gave bruising details
about for-profit higher education. The
2012 report disclosed that 96 percent of
those enrolled in for-profit schools take
out student loans and that the average
student at a for-profit college graduates
with a median $32,700 in debt. Private
non-profit college graduates and public
university graduates had median debts
of $24,600 and $20,000, respectively.
Additionally, according to the National
Center for Education Statistics, while
52 percent of students complete their
bachelor’s degree within 4 years at nonprofit private schools, only 20 percent of
students complete their bachelor’s degree
within 4 years at for-profit schools.
For-profit colleges are the fastestgrowing postsecondary schools in the

Page 11

nation, although instead of focusing on
traditional college students—recent high
school graduates—they tend to target
people over the age of 25, many of whom
are veterans or working parents. These
colleges also enroll a disproportionately
high share of low-income and minority
students; students enrolled in for-profit
colleges are 22 percent African American
and 65 percent female. Many students
in for-profits schools tend to be in more
precarious financial situations than other
students even before they enroll.
In terms of unemployment and
earnings rates, 23 percent of students
who graduated from for-profit colleges
were unemployed six years after initial
enrollment compared with 15 percent
in other institutions. Because for-profit
schools, many them large national
chains, derive most of their revenue
from taxpayer-funded student financial
aid, they are of interest to policymakers
both for the role they play in the higher
education ecosystem and the value
they provide their students. Ensuring
that potential students have objective
information about the costs and expected
benefits of for-profit programs could

FOR - PROFIT

improve
postsecondary
education
opportunities for disadvantaged students
and counter misleading recruitment
practices at for-profit colleges.
The Obama administration oversaw
a major crackdown on predatory forprofit colleges. In 2014, the Obama
administration announced that for-profit
colleges would have to prove they were
preparing students for careers or face
having their federal aid revoked. Obama
sought to protect Americans from poorperforming career programs that burden
students with debt and leave them few
opportunities to succeed. In 2015, Obama
introduced the “gainful employment”
rule, requiring for-profit schools to keep
track of how much debt their students
take on relative to their employment
numbers. This rule linked vocational
schools’ access to federal funds with their
record on job placement and earnings.
In November 2016, Obama introduced
a second rule, the “defense to payment”
rule, which stated that a student who
could prove that a school misled them
would have their loans forgiven. Legal
actions arose from allegations regarding
exaggeration of the success of graduates.

PUBLIC COLLEGE

One of the most publicized cases involved
the infamous Trump University that
ultimately paid $25 million in November
2016 to settle lawsuits with former
students who claimed that they had been
swindled by the university.

the intentions are. The last thing any of
us want is to unnecessarily close down
important programs.” Clearly regulation
of these for-profit colleges will not be a
priority in the new administration.

Since the election of President Trump,
there has been renewed focus on
deregulation and its impact on markets.
Many investors are bullish on for-profits
under President Trump. By early February
2017, the stock price of DeVry, a for-profit
college invited to a January “listening
session” on education with Trump’s team,
had jumped almost 40 percent since the
November election. Additionally, forprofit Strayer Education’s stock price
jumped 35 percent and Grand Canyon
Education’s stock price has jumped more
than 28 percent.

However, while many focus on the
influence of deregulation on markets,
it is essential to consider the grander
social impact. In terms of the future of
education and employment in the U.S.,
deregulation of these for-profit schools
could have a much larger impact than
simply market trends: further entrenching
socioeconomic inequality. Since these
colleges enroll a disproportionately
high share of financially disadvantaged
and minority students, these students
are at the greatest risk of defaulting on
their student debt if unemployed after
graduation. While the forecast appears
bright for for-profit college companies
during the Trump administration,
prospects of graduation and employment
for for-profit college students appear dim
and obscure.

Many observers are worried that the
Trump administration will not be as
much of a “ferocious watchdog” of the
for-profit college industry. At Betsy
DeVos’s confirmation, when asked about
rules such as the “gainful employment”
rule, DeVos said “I will review that rule
and see that it is actually achieving what

Page 12

Featured Article

The New Kings of Wall Street
by Jeremie Mutolo
Much like death and taxes, a cold and rainy
September afternoon in Ithaca, NY is a
certainty of life. Seeking refuge from the
torrential downpour, students all across
campus scrambled back to their respective
homes. Yet, inside of the newly-opened
eHub workspace in Kennedy Hall, just off
Tower Road, a gathering of undergraduate
and graduate students chatted, settling in
and preparing to learn more about one of
the hottest topics on campus: algorithmic
trading.
Sparkstone Analytics Executive Director
Ryan Kishore, alongside his fellow cofounder, Analytics Director Rishab Gupta,
was giving a presentation to a sizeable
group of students on how to develop
their own algorithmic trading strategy.
This presentation was part of their biannual Sparkstone Trading Challenge, a
competition where participants are given
access to the Sparkstone database and
tasked with developing their own trading
strategy over the course of a month. The
competition, much like Sparkstone, is a
new addition to the already large financial
presence on Cornell’s campus. Last
semester, over 100 students partook in
the competition, seeking prizes including
dinner with employees at Optiver, a high
frequency trading firm that has experienced
growing success over the past few years.
“As the first major organization on

campus to embrace quantitative finance
and consolidate interested people, we are
thrilled as we serve this growing curiosity,"
says Kishore when asked about the growing
presence of quantitative trading on the
Cornell campus. “We also notice that not too
many people understand that quantitative
finance has a large range of roles that can
exist within the field. I am looking forward
to students discovering what the spectrum
looks like, whether it is algorithm design,
factor modeling, or even low latency
hardware design.”

" It only takes a brief look
at the performance of
actively-managed hedge
funds over the past several
years to see what causes the
mass exodus of investors
from their firms."
Sparkstone Analytics is a small group
of students that represents the growing
interest in quantitative trading sweeping
the campus and, more broadly, the finance
industry. Over the past few years, numerous
clubs and projects have sprung up across
campus to satiate demand among students
seeking to learn more about automated
trading. What explains the billions of dollars
institutional investors have moved to this
new technology-driven form of investment?

Page 13

Quant funds allocate investor capital to
securities relying heavily on advanced
quantitative analysis. The strategies
employed by the fund managers rely
on heavy mathematical and computergenerated algorithmic models built on data
gathered from the past several decades.
Many of the traders employed by these
firms come from traditional STEM-heavy
backgrounds, with some holding doctorates
in mathematics and physics and others
having strong engineering backgrounds.
Take Two Sigma, for example: in their
Manhattan office they employ nearly
800 researchers. Roughly 130 of them
holding doctorates, and 6 are former
Math Olympiad winners. These funds’
consistent performance derives from using
its algorithms and mathematical models to
sift through mammoth amounts of data,
attempting to find relationships and trends
that a regular fund manager may not. They
don’t trade based on “gut feelings” but
rather precise reasoning.
It only takes a brief look at the performance
of actively-managed hedge funds over the
past several years to see what causes the
mass exodus of investors from their firms.
Since 2009, actively-managed funds have
been up roughly 3 percent, posting returns
lower than those of the S&P 500 and equity
dividends of the index during that time.
According to Bloomberg, hedge funds in
2016 delivered returns of 1.2 percent, well

Featured Article
below the S&P 500’s 7.6 percent return.
These funds saw a resounding $25.2 billion
withdrawn last July alone, facing a $55.9
to $106 billion outflow in 2016 overall as
investors sought out larger returns.
Much of the frustration that has catalyzed
the demise of hedge funds has come from
the traditional “2 and 20” fee. 2 percent of
the value of the fund is paid to the manager,
regardless of whether it performs well, with
an additional 20 percent pocketed from any
profits the fund earns. When these firms
posted gargantuan returns, investors could
easily turn a blind eye. But lately, funds’
poor performance has caused investors
to lash out against managers. Renowned
investor Warren Buffett has even voiced
his concern about the absurd fees in an
interview with CNBC, saying that “two and
twenty… borders on obscene.” A few of the
most notorious hedge fund managers like
Bill Ackman and Paul Tudor Jones have had
to answer for the lackluster performance of
their funds over the past few years. They
have since begun cutting their fees and
reevaluating their investment strategies in
hopes of stopping the financial bleeding.
While active funds spent much of the
past year dealing with investor backlash
and poor performances, quant funds
flourished. Over the past several years,
roughly $7.9 billion has poured into funds
that
employ
consistently-performing
quantitative strategies, pushing the total
amount of assets under management for
quant funds up to $908 billion. According
to Forbes, quant funds hauled in $113
billion over the past several years, making
up 25 percent of total net gains brought in
by the top 20 hedge funds over the course
of their existence. Firms like Two Sigma,
Renaissance Technologies, D.E. Shaw, and
PDT Technologies have all enjoyed robust
returns. Renaissance’s Equity Fund rose
4.6 percent last June, 3.8 percent higher
than hedge funds globally. Two Sigma’s
fund rose 12.6 percent through last year,
versus 2.2 percent for hedge funds across
the board according to Bloomberg. D.E.
Shaw, considered one of the pioneers of
quantitative finance, has consistent doubledigit returns net of fees over the past several
years. Some quant fund managers have

achieved near celebrity status; top Wall
Street investors have forked up to $1000 just
to spend an evening with the “quant fund
master”, Peter Mueller, of PDT Partners.
His fund has seen annualized returns of
roughly 18.5 percent since its inception.
While quant funds already outperform
their competitors, some investors believe
they have a long way to go before being
widely trusted. Big name quant funds such
as Systematica saw losses of $3.8 billion,
or a resounding 11 percent drop in their
flagship fund, while Cantab Capital saw
its main quant fund drop nearly 8 percent.
BlackRock recently reported that its
quantitative hedge fund strategies suffered
losses for 2016. Much of the industry’s
hesitation towards quant funds stems

“No man is better than a
machine. And no machine
is better than a man with a
machine.” -Paul Tudor Jones
from the great quant meltdown of 2007.
In August 2007, quantitative hedge funds
across the board faced monumental losses
seemingly out of the blue. As one fund
began to unwind, others followed quickly
behind resulting in a massive sell-off by
numerous quant funds. The surprise crash
still lacks a suitable explanation, leading
some to fear similar implosions will happen
again and feeding into concerns about
placing money in the hands of computers.
Despite their past inconsistencies, the
beauty of quant funds lies in their capacity
for evolution. They constantly develop new
strategies, each one more sophisticated
and utilizing more data than the previous,
in hopes of generating larger, more
consistent returns. Sparkstone’s Kishore
believes that the superiority of human
investors is beginning to decay: “This is
a critical question with implications for
anyone considering work in the finance
industry. Ultimately, alpha generated by
humans will diminish as computational
techniques improve and thought processes
are systematized,” he says in an interview.
It seems that more and more actively-

Page 14

traded hedge funds are beginning to
adopt quantitative strategies to bring back
investors. Paul Tudor Jones, who was a key
investor in the opening Two Sigma Partners
in 2001, has laid off 15 percent of the
workforce at his Tudor Investment Corp.
and is working towards implementing
quant-driven strategies in order to post
higher returns. The rest of Wall Street is
also following this trend, hiring some of the
top talent from Silicon Valley in hopes of
making their firms more competitive and
appealing to investors.
While the past few years have seen humans
take the backseat in many industries,
finance may be the only frontier in which
computers will never gain total control.
Hedge fund managers, despite the absurd
fees, are able to command so much by
harnessing their ability to see things that
a computer-generated algorithm may
not, honing in on potentially lucrative
investments. “Yet, we will not see a complete
overtaking as there are certain roles and
pattern recognition abilities that humans
will continue to excel in the foreseeable
future," Kishore says. Hedge fund managers
can still sift through current events and
make the appropriate trades to ensure
his investors are protected. But hedge
fund managers should not take too much
comfort in their edge. Quantitative hedge
funds are beginning to implement better
artificial intelligence into their strategies,
allowing them to seek out patterns that
could not be detected with a mathematical
formula. Take traders at BlackRock, who
use satellite images of China’s largest
cities to draw conclusions on China’s real
estate industry. There has become a much
greater emphasis on artificial intelligence’s
implementation in these already tech-heavy
funds. As AI evolves, quant funds can turn
to machines to sift through millions of
news articles and test models that make
trades based on hypothetical world events,
further diminishing the need for human
intervention. Paul Tudor Jones said it best
in an address to the remaining employees of
his firm: “No man is better than a machine.
And no machine is better than a man with
a machine.”

Wall Street Deregulation
by Cameron Griffith

Donald Trump’s campaign pledged to cut
excessive regulation that burdens small businesses
and slows economic growth, promising that “for
every new regulation, we must get rid of two
existing regulations.” One of the prime targets
for deregulation is the Dodd-Frank Wall Street
Reform and Consumer Protection Act. President
Trump recently issued an executive order
outlining the intended business policies of his
administration and asking his Treasury Secretary,
Steve Mnuchin, to submit his review of current
financial regulations and possible policy changes
within 120 days. Although he did not offer any
specifics, many expect that Trump will look to
the Dodd-Frank Act as his first target for financial
deregulation, having made campaign promises
“to do a big number” on Dodd-Frank.
Dodd-Frank was signed into law by President
Obama in 2010 to reign in the power of major
financial institutions following the 2008 subprime
mortgage crisis in the hopes of preventing
another financial meltdown. Among its 2,300
pages were the requirements that large banks
undergo routine “stress tests” to ensure they
have enough capital reserves to meet unexpected
demand and that they adhere to the Volcker
Rule, a rule preventing consumer banks from
making speculative investments with their client’s
money. Dodd-Frank also overhauled nearly all
of the existing financial regulatory agencies and
established the Consumer Financial Protection
Bureau which has helped return over $10 billion
to the victims of financial malpractice and fraud.
Despite mixed public opinion of Dodd-Frank
itself, many Americans believe the law did not
go far enough to limit the power of Wall Street.
A poll taken by Lake Research, a leading public
opinion and political strategy firm, found that 70
percent of people believe it is “very important” to
regulate financial services and products “to make
sure they are fair for consumers.” It is highly likely
that Dodd-Frank will face serious rollbacks from
a Trump presidency.
Perhaps the clearest indications of Trump’s
intentions come from those selected to run
his administration. Treasury Secretary Steve
Mnuchin has expressed that Dodd-Frank “limits
banks' liquidity,” thus harming both consumers
and small businesses. Gary Cohn, the director
of Trump’s National Economic Council, has

said that Dodd-Frank causes banks to “hoard
capital” instead of investing it in the economy.
Both Mnuchin and Cohn have served as top
executives at Goldman Sachs, one of the many
firms implicated in the financial crisis. In Trump’s
administration, they will be reunited with White
House Chief Strategist Steve Bannon, Securities
and Exchange Commission Chairman Jay
Clayton, and White House advisor Anthony
Scaramucci, all of whom held senior positions
at Goldman in some capacity. These appointees
appear unlikely to favor more stringent regulation
of Wall Street, priming Trump’s administration
for a departure from the anti-Wall Street attitude
of his predecessor.
Although various politicians and bank executives
have taken issue with the provisions of DoddFrank, saying that it hinders economic growth
and raises the cost of running a small business,
Trump must choose his side on the issue carefully.
Allying himself with Wall Street risks linking his
name with the industry widely blamed for the
financial crisis and putting him at odds with the
working-class men and women who lost their
jobs, homes, and retirement savings in the Great
Recession. To preserve his populist pro-business
and pro-middle America image, Trump will
likely target the most controversial aspects of
Dodd-Frank.
Many assume that the conflict minerals clause
will be the first target of Trump’s administration.
A recently leaked executive order proposes to
repeal this provision altogether, citing the cost
to U.S. businesses, the increase in Congolese
unemployment and poverty, and the violence
for control of mines that has erupted between
the country’s various militia groups. Section
1502 of the Dodd-Frank Act requires companies
to disclose the use of “conflict minerals,” or
minerals mined using slave labor. Originally
intended to reduce the instances of slave labor
in the Democratic Republic of the Congo, this
measure has had disastrous consequences for
the locals who rely on the precious mineral
trade to earn a living. By reducing the demand
for Congolese minerals, the act has driven many
miners into poverty and has incentivized militias
to turn to extracting wealth directly from local
communities.
Trump is also likely to focus on eliminating the

Page 15

CEO Pay Ratio Disclosure Rule, which many
believe is politically motivated and does nothing
to improve financial regulation. This rule requires
that most publicly traded companies disclose
the ratio of CEO pay to the median income of
all other employees of the company. The U.S.
Chamber of Commerce has said that the rule is a
“costly disclosure which fails to provide investors
with useful, comparable data.” Even the chairman
of the SEC under Obama, Michael Piwowar, has
made several efforts to forestall implementation
of the rule.
While the fate of the conflict minerals clause
and the CEO Pay Ratio Rule seem to be largely
decided, the future of the Volcker Rule remains
uncertain. The Volcker Rule prohibits commercial
banks, banks that issue loans and hold deposits,
from investing in hedge funds, derivatives, or
other proprietary trading instruments. Under
the Volcker rule, banks are still allowed to make
speculative investments, provided they do so
on behalf of their clients and not for their own
operating profit. This ensures that the risk of such
investments is limited to the wealthy few who
can afford to invest in hedge funds and other
alternative investments. Despite its merits, almost
all major commercial banks oppose the Volcker
Rule for the damage it has done to their bottom
line. The Federal Reserve has given credibility
to their argument by publishing a report that
concludes the Volcker Rule limits liquidity in the
corporate bond market during times of financial
stress. Despite the high levels of opposition from
the big banks, it is interesting to note that Steve
Mnuchin argued in favor of the Volcker Rule
during his senate confirmation hearing, going on
to say that “proprietary trading does not belong in
banks with FDIC insurance.” This revelation only
adds to the confusion about the administration’s
intentions towards the Volcker Rule.
The Trump Administration’s true intentions
remain unclear with regard to financial
regulation. Trump’s past promises to dismantle
Dodd-Frank are at odds with his own Treasury
Secretary’s beliefs that parts of the act hold merit
and should continue to be enforced. Only time
will tell whether this administration will choose
to stand by American business or the American
consumer.

Disappearing Act
by Hamish MacDiarmid

Page 17

A radical change in Swiss banking
regulation will now have a tremendous
impact on the global economy. In
September 2015, the Swiss Bankers’
Association reported that Switzerland had
$6.5 trillion in assets under management
of which 51 percent originated abroad;
a large percentage of that wealth came
from the United States. To gain access to
these funds, the United States instituted
its Foreign Account Tax Compliance Act
(FATCA), which essentially requires that
foreign financial institutions and certain
other non-financial foreign entities
report foreign assets held by citizens of
the United States. Recently, Switzerland
began to demand that America comply
with the FATCA tax laws, which the
United States has imposed upon the
European nation, but has not enforced
domestically.
The FATCA implementation has caused
widespread anger, as Switzerland has
been forced to abandon its primary
attraction for foreign investors: its
anonymity. What had allowed for much
of its continued economic strength in
recent years is now being weakened
through U.S. foreign policy. Prior to the
passage of FATCA, Americans could have
a relatively unknown amount of money
stashed away in Europe, but now the
IRS through FATCA documentation can
access these accounts. Essentially, this
means that any United States citizen with
hidden assets in foreign accounts held in
Switzerland will now have to pay taxes
on this previously untapped income. The
United States, one of the only nations
that requires citizens living abroad to pay
taxes, hopes to repatriate some of these
foreign assets. It is estimated that there
is $100 billion a year in unpaid taxes on
US citizens' assets overseas. United States
citizens must now report this income to
the United States government. This has
effectively ended the period of secret
banking in Switzerland and in many
other secret banking nations.
There has been a distinct backlash against
these measures, especially in Switzerland.
Domestic investors fear that Swiss banks

will no longer issue loans or accounts to
U.S. citizens in retaliation. Many foreign
U.S. citizens are highly critical of the
move. “People are very angry and upset
but some are really scared,” declared Jackie
Bugnion, a director and tax specialist
at American Citizens Abroad (ACA), a
Swiss-based organisation that calls itself
“The voice of Americans overseas."
Americans have long viewed the Swiss
banking industry as highly secretive
and corrupt, an image reinforced with
the popularity of movies like The Wolf
of Wall Street. However, thanks to
FATCA, this world of shady financial
dealings is shrinking. The United States
began enacting FATCA when it decided
to act on Switzerland’s vast stores of
foreign wealth. Switzerland is not alone
in engaging in this kind of behaviour;
several other countries, such as Bermuda
and the Caymans, participate in this
practice regularly. The biggest holders
of these shady offshore accounts are the
super-wealthy, who are believed to have
up to $21 trillion stashed across the
world from the Caymans to Switzerland.
This $21 trillion stashed by the superrich could provide an estimated $188
billion in tax revenue, which could have a
sizeable impact on domestic fiscal policy.
Swiss bankers believe that the efficient
services they provide will ensure their
banks remain in full-force. However,
Sandro Bartolini, a Geneva-based
director of the private consultancy US
Tax & Financial Services, believes that
“The costs of administrating FATCA will
be quite substantial, but the pendulum
has swung back to the middle.” This type
of attitude critiques the dangers that
FATCA could place on the Swiss banking
system and its role as an integral part of
the nation’s economy.
Several rivals to the Swiss banking model
still have maintained their secretive
financial systems with lax regulations,
such as Lichtenstein and Monaco.
However, many investors now look to
the United States as a place to store
their assets. For both non-Americans

Page 18

and U.S. citizens, several states such as
Delaware have low taxes and a secret
banking structure even under federal
law. The Trump administration intends
to deregulate the financial sector and
banking to provide a more competitive
economy. It is likely that the United
States would ignore calls from foreign
governments to regulate the United
States’ banking secrecy. The strength of
the dollar and the reliance of the world
economy on the United States would
ensure that no aggressive policies could
be taken to oust the United States from its
entrenched financial shadiness.
The United States has a huge offshore
sector which continues to provide
foreigners and citizens alike the ability
to protect their money. While the United
States has repelled any foreign attempt
to regulate its financial markets, it has
hypocritically massacred the Swiss
banking establishment with the creation
of FATCA. This has led many wealthy
internationals to choose to move their
money to the United States where the
dollar and federal government will
protect it from homeland interference.
For many of those outside the U.S.,
it is not just about hiding money but
about security. Wealthy individuals
living in countries with weak financial
protections and or insufficient criminal
justice systems often find it necessary
to hide their money somewhere safe
and secure from local crime syndicates.
The implementation of FATCA risks
leaking information on citizens’ wealth
to observant syndicates. This could
lead to kidnappings, like the young
former Argentinian President Mauricio
Macri, to extort money from affluent
families. When not even the United
States government is safe from forces like
WikiLeaks, wealthy individuals must be
aware that information on their money
could leak to local crime groups, putting
them in danger.

Venmo: Virtue or Vice?
by Lily Wang

“Venmo me.” It's a phrase that has already
integrated into our daily vernacular, as most
of us have personally used or seen the app in
action. With Venmo, one can quickly buy a
Krispy Kreme donut at a fundraiser, easily pay
back a friend who covered everyone at Miyake
yesterday, or effortlessly charge a roommate for
the money he borrowed three months ago, all in
seconds. That’s why college students swear by
Venmo—it’s fast, iPhone accessible, and best of
all, involves minimal to no physical interaction.
Venmo is the perfect life hack.

Unsurprisingly, millennials account for over 50
percent of those who use peer-to-peer (P2P)
payment apps. P2P apps like Venmo allow users
to easily transfer money to each other with
their smartphones. The rising popularity of P2P
apps brings to light a subtle shift in consumer
preferences: a global move towards a cashless
society in which cash and checks become
irrelevant. Although some countries already
enjoy the benefits of ascendant digital finance,
a cashless society potentially jeopardizes the
safety of our money, opening opportunities for

Page 19

corrupt governments or malicious hackers to
access people’s finances.
Founded in 2009 by two University of
Pennsylvania graduates, Venmo was originally
marketed as a music startup. People would to
send a text message to a band requesting a song
and have an mp3 show up in their email. The
founders, Andrew Kortina and Iqram MagdomIsmail came up with the name “Venmo” by
combining the Latin word vendere, meaning “to
sell," with “mo” for mobile. They wanted to give

the brand a name that could easily be used as a
verb. And sure enough, Venmo is increasingly
gaining acceptance as a verb with “Venmo me”
replacing the out-of-date “Pay me back later.”
The momentous idea to turn Venmo into an app
for transferring money sprouted when MagdomIsrail forgot his wallet when he visited Kortina in
New York City for a few days. Although Kortina
covered for his friend, it was very difficult and
cumbersome for Magdom-Israil to pay him
back with a check. Kortina never did cash the
check, but instead was paid back with something
even more valuable than money—an idea.
Originally, Venmo was designed to allow
customers to pay and receive payments through
text message. Realizing that the information
exchanged within these text messages portrayed
stories about how and where people were
spending their time, Kortina and Magdom-Israil
decided to incorporate a social aspect to the
application. Soon, Venmo was not just an app
used to pay back a friend for covering a meal,
but a social networking platform where emojis
could be used to symbolize daily activities.
Typing fun emojis and messages with every
digital exchange is certainly more fun than
filling out a check.

action would help prevent the use of counterfeit
cash to fund illegal activity and terrorism. Since
taking office in 2014, Modi’s government has
pointed India towards demonetization, aiming
for a larger goal of “financial digitization,” where
financial exchanges will be run completely by
technology. For example, Indian citizens will
shift to using smartphones and programs that
will identify users from fingerprints and retina
scans to maximize security.
India’s dramatic leap towards a cashless society
offers a rough blueprint for the United States.
Nobel Prize-winning economist Joseph Stiglitz
has argued that the U.S. should follow India’s
steps to offset the rising global issue of inequity
and corruption. During the World Economic
Forum meeting in Davos, Switzerland, Stiglitz
said, “I believe very strongly that countries like
the United States could and should move to
a digital currency so that you would have the
ability to trace this kind of corruption. There are
important issues of privacy, cybersecurity, but it
would certainly have big advantages.”

Venmo’s evident success quickly turned into big
payouts. In 2012, the two friends sold Venmo
to Braintree for $26.2 million. PayPal bought
Braintree a year later for $800 million, acquiring
Venmo. Now Venmo operates more than $1
billion in peer-to-peer payments each year.
In less than six years, Venmo has become the
leading P2P app, quickly catching up to even the
biggest companies. The Financial Brand reports
that in the fourth quarter of 2012, Venmo’s
transaction volume totaled $59 million, less than
half of Starbucks’s during that period. However,
by the first quarter of 2014, the two companies
were tied at $314 million. Venmo may already
be a giant in its industry, and it shows no signs
of stopping.

A cashless society benefits from efficiency. As
many have experienced through Venmo, digital
transactions are fast, clean, and accurate. For the
most part, there is no room for human error or
miscalculation. Similarly, mobile apps allow for
easy tracking of payments and balances. With
every transfer recorded in a database, people
can conveniently refer to their transactions
whenever needed. Tangible money itself causes
problems. Ironically, storing, creating, and
processing physical money costs money. Last
September, the head of Singapore’s central
bank encouraged banks to transfer the cost of
managing cash and checks to their customers
to promote the use of digital payments. Cold
cash’s anonymity also attracts criminals and
facilitates dubiously legal and under-the-table
transactions. Getting rid of cash, especially bills
worth over $20, could make crimes such as drug
and human trafficking, bribing public officials,
and terrorism harder to commit.

The idea of a cashless society has appeal beyond
the United States. Last November, the Indian
Prime Minister Narendra Modi announced
that the 500 Rupee and 1,000 Rupee notes,
which account for roughly 86 percent of all
Indian currency in circulation, were no longer
legal tender. Instead, the government would
issue new 500 and 2,000 Rupee banknotes in
exchange for the old ones. Modi claimed that the

Nevertheless, India’s case shows that there are
still challenges associated with shifting towards
cashless society. Modi’s sudden decision to alter
the currency system disrupted the economy and
threatened economic output. The suddenness of
the action paired with prolonged cash shortages
resulted in the BSE SENSEX and NIFTY 50
stock indices falling over 6 percent on the day
the policy was implemented. People had to wait

Page 20

for hours in long lines just to exchange their
bank notes.
Outside of India, financial digitization must
wrestle with widespread fears of security issues.
Many Americans simply do not trust big banks
to manage and hold their money. According
to the Federal Deposit Insurance Corporation
(FDIC), nearly 9.6 million households do not
have bank accounts. Labeled “unbanked” by the
FDIC, these people prefer to keep their money
close and away from the scrutinizing eyes of
banks. The unbanked population presents a
challenge for proponents of a cashless America:
would the government have to force people
already skeptical of a digital Big Brother to
create mobile accounts?
Eric B. Delisle, founder of the cybersecurity
company ICLOAK, explained that “the
personal computer systems used to access
account management or online shopping where
credentials may be input are being compromised
at a greater rate than ever before. Without using
a specialized, secure system, users have no good
way of knowing they are using a safe computer
that isn’t stealing their credentials.” And that is
exactly why people are concerned; technology
holds all the power. Every time someone opens
a mobile app, logs on to email, or accesses
a website, someone or something could be
watching.
Any American transition to a cashless society,
however, should start with phasing out higher
bills, a method already being deployed in
Europe. Last May, the European Central Bank
announced that it would discontinue the 500Euro bank note by the end of 2018. A slow and
gradual push towards cashless lifestyles may
help countries avoid financial distress. Looking
at the present, Venmo and other P2P apps are
not going away anytime soon. People treasure
Venmo’s convenience, accessibility, and emojisavvy statuses. Every day, Americans inch
towards adopting a cashless lifestyle. But the
country is not ready to make the big leap just
yet. Nevertheless, Venmo demonstrates the
possibilities of digital money and its advances
upon society. Most importantly, it represents
the reality that one day, something as intangible
as an iPhone app may usurp humanity’s most
tangible entity: money.

From a Chain to an Ecosystem
by Nolan Abramowitz

Industry is entering a new age of smart
automation fueled by cyber-physical systems
capable of learning, predicting, and making
independent decisions with little human
intervention. The new industrial revolution,
labeled industry 4.0, will disrupt businesses
operations on a large scale; however, this
revolution has tremendous potential to
increase the quality of life for people around
the world. History illustrates the net positive
gain from past industrial revolutions. Three
times, industrial revolutions challenged the
status quo and were met with skepticism. All
three times, the revolutions birthed innovative
technologies that created long term returns to
capital, labor, and society. According to a study
by Mckinsey & Co., industry 4.0 will follow
this trend and generate $3.9 trillion to $11.1
trillion in economic value by the year 2025.
Value will be created by improving supply
chain management technology and increasing
consumer accessibility to new markets around
the world.
In the 1970s, the third industrial revolution
utilized electronics and information technology
to automate production which pushed the
productivity of manufacturers to new levels. The
fourth industrial revolution builds on the third
and is characterized by a fusion of technologies
resulting in fully automated cyber-physical
systems. The fourth industrial revolution was
coined as “industry 4.0” by Henning Kagermann,
the head of the German National Academy
of Science and Engineering (ACATECH). He
explains that manufacturing processes will be
determined by the interaction between real
and virtual worlds. The complete symbiosis of
hardware and software will create an intelligent
production network by enabling new machines to
produce output while simultaneously analyzing
data from all aspects of a business’s supply
chain. A few new technological drivers that will
facilitate the real and virtual world connection
are advanced robotics, artificial intelligence,
sophisticated sensors, cloud computing, data
capture and predictive analytics, and digital
fabrication.
Industry 4.0 has the potential to generate value for
consumers, workers, and businesses. Specifically,
cyber-physical systems will create $3.7 trillion
in value for factories and distribution centers
through operations and equipment optimization
as well as by improving worker health and safety.
In addition, $600 to $900 billion in value will be
created in offsite settings such as improved out-

bound logistics through predictive routing and
autonomous trade (Mckinsey & Co.). According
to a recent PwC poll, 72 percent of companies
expect to reach advanced digitalization in
their operations by 2020. During the same
time, 86 percent of companies anticipate major
cost reductions and revenue gains. The world
economy will become highly advanced and
reach optimal efficiency through the use of
cyber-physical systems. However, as was the
case for previous industrial revolutions, many
jobs will become automated early on. Bloomberg
reports that more than 50 percent of jobs in
the US could become automated in the next 20
years. Automation will create many immediate
challenges, and it is even possible that the net
displacement of workers by machines at the
beginning of the revolution will overshadow the
net returns to capital and the labor force in the
future.
Supply chains have continued to resist
fundamental change and remain outdated
systems. Industry 4.0 will create a dynamic,
interconnected ecosystem which will enable the
supply chain to evolve and merge into a digital
supply network. External drivers of a digital
supply network include: increasing customer
expectations, global regulatory requirements,
cost pressures, and supply chain complexities.
Technologies that will enable the digital
supply network to be developed include: cloud
platforms, smart sensors and mobile tracking
solutions, and intelligent algorithms. The digital
supply network affects how managers make
decisions and can create more opportunities for
strategic advantages. In the past, it was difficult to
analyze the final steps of the supply chain despite
the importance of considering distribution and
out-bound logistics.
Companies can utilize industry 4.0 for material
sourcing and inbound logistics. Currently,
disruptions in the flow of raw materials are
common due to unforeseen disasters or shortages.
However, with industry 4.0 data can be collected
and analyzed from the outside world in real time
to determine where changes in demand occur.
This information can be automatically relayed to
factories, allowing production and distribution
schedules to be updated to the optimal levels.
Furthermore, the digital supply network
will lead to logistic optimization by allowing
manufacturers to receive constantly updated
transportation information through sensors.
For example, an algorithm can analyze weather
data to determine the optimal time to transport

Page 21

goods to consumers. Logistical optimization
can also add value to firms through predictive
maintenance and direct delivery with drones and
driverless trucks. However, cyber-attacks on the
digital supply network are a major threat, making
the economic ecosystem vulnerable to terrorism.
Due to the complexity and interconnectedness
of the system, securing every aspect of industry
4.0 technology will be difficult. One virus could
irreversibly damage billions of dollars of tangible
and intangible assets.
Cyber-physical systems will make new
markets available to consumers and drive
economic growth in many parts of the world.
Specifically, companies in the Asia-Pacific
region are forecasted to have the highest gains.
Reductions in transaction, transportation, and
communication costs will help unlock these new
markets. Transaction costs are currently a major
expense for multinational corporations and deter
access to international markets. Autonomous
distribution channels and the instant transfer of
information through the digital supply network
will decrease the cost of trade.
Many firms have started to focus on distribution
centers to gain a strategic advantage from
recent advancements in smart automation. New
low-cost sensors, augmented reality, wearable
technology, and high-performance computing
and robotics are all used to improve automation.
Industry 4.0 will add value to distribution
centers by increasing the inventory turnover
rate and helping meet customer expectations
that require rapid delivery. For example, vision
picking, a type of wearable technology, can use
AR to overlay computer generated images across
a worker’s line of sight to assist them in picking
necessary inventory items or tools. Also, new
software such as warehouse execution systems
will monitor all automated assets and balance
them with the labor force to create optimal
schedules to reach distribution targets. By using
cyber-physical systems, distribution centers
can maximize their asset utilization, minimize
downtime and increase response speed.
The age of automation appears daunting,
yet companies must adapt to the changing
technological landscape to stay competitive.
Companies and individuals that refuse to adapt to
these changes will be left behind. It is imperative
that firms invest now in smart automated
technologies to establish a first mover advantage
so they can stay ahead of their competition and
be leaders of industry 4.0.

An Eye in the Sky
by Catherine Wei

Previously, technology and nature have
been at odds with each other, resulting in
the destruction of wildlife and the rise in
poaching. However, drones are modernizing
wildlife conservation by providing an eye in
the sky to detect poachers and closely examine
populations and habitats, ultimately protecting
the world's endangered species.
Human technology has accelerated the
destruction of wildlife areas, changed the
climate, and provided deadly weapons
to poachers. The International Union for
Conservation of Nature (IUCN) estimates that
41,415 species are endangered and 16,306 are
threatened with extinction. However, the latest
drone applications are flipping the script on
how technology affects animal conservation by
helping scientists track night-time poachers,
observe populations of endangered species,
and collect up-close data.
Animal poachers target many profitable animals
like elephants, rhino, and humpback whales
to harvest valuable products from horns to
meat. In 2015 alone, more than 30,000 African
elephants were killed for their tusks; roughly
3 rhinos and 96 elephants are poached every
day. “The fundamental challenge of poaching
is that there's more money to be made in
killing and selling rare, exotic, and endangered
animals than there is in protecting them,” says
journalist Kelsey Atherton. Elephant poaching
has increased in recent years, with some of
Africa’s most notable armed groups hunting
the animals to trade valuable ivory tusks for
weapons. Much of the ivory is flown to China
where the ivory is transformed into ornaments,
jewelry, and medicine. The price per pound of
ivory can be upwards of $1,000.
The effort to reduce poaching is challenging
because tracking poachers and monitoring
animal conservation is difficult and lifethreatening. Conservation groups aiming to
catch poachers often face dangerous weather
conditions and even unpredictable attacks from
wild animals. The Game Rangers Association of
Africa estimates that 1,000 rangers have been
killed worldwide over the last 10 years while
working to protect wildlife and combat armed
poachers. In addition, poachers are difficult to
track because they operate at night using the

cover of darkness.
With the rise of aerial technology like drones,
governments and nonprofits now have the
resources to intervene against poachers.
Drones allow conservation groups to closely
monitor both poachers and protected animals
from above. Tanzania and many conservation
groups have deployed drones specifically to
track animals and identify poachers. Drones
can work in tandem with on-the-ground agents
to predict when animals are in danger and take
protective measures. Park rangers can connect
with off-site drone operators by sending
location coordinates using GPS chips. Animals
can also be GPS tagged, which allows operators
to pinpoint location and analyze historical
geolocation movements. The use of drones for
conservation is increasing, and in 2013, Google
awarded the World Wildlife Fund (WWF) $5
million to develop more advanced UAV drone
systems specifically designed to meet the needs
of conservation groups. WWF hopes to expand
its drone operations and integrate UAVs
with sensors and tracking software to reduce
poaching. The conservation organization
expects to partner with countries like Namibia
and Nepal to provide hardware and training to
government officials.
Drones can scale down the highly profitable
trade of illegal animals. The illegal trade of
exotic animals generates between $7 - $10
billion annually. For example, a well-preserved
rhino can be worth nearly $500,000, with each
horn selling for roughly $60,000 per kilogram.
The high value of animals like rhinos provides
an incentive to poach. The profits gained from
selling animals are resources for poachers
to purchase more efficient weapons and
equipment. In contrast, conservation groups
tasked with fighting poaching are often nonprofits relying on donations or underfunded
government departments. For instance, Ol
Pejeta Conservancy in Kenya estimates that
their organization has spent $2 million to save
white and black rhinoceros. Their conservation
technology has to be cheap. Drones provide a
cost-efficient approach to animal conservation.
Jonathan Downey of Airware, an American
venture-funded startup that provides UAVs,
estimates that drones intended for antipoaching cost between $50,000 - $250,000

Page 22

depending on the specification and batteryoperated range of the UAV. Compared to the
selling price of animal tusks and meat, the cost
of drones is vastly more affordable and while
also protecting against losing human life.
In addition to tracking poachers, drones can
help scientists study endangered species.
Marine biologist David Johnston uses drones’
unique aerial perspective to study humpback
whales in Antarctica. Humpback whales hunt
by blowing rings of bubbles, which can be
difficult to view from land or boat. A drone’s
camera can pick up details like the size and
frequency of the bubbles and how many whales
are involved, allowing scientists to observe the
behavior of whales intimately through cameras
from above without disturbing their natural
habitats. This respects the animals and protects
scientists from unexpected attacks when they
step foot into the animals’ personal space.
Drones offer a safe alternative to manned
aircraft for collecting data on wildlife
conservation. Equipped with cameras and
sensors capable of taking high-definition
photos and thermal imaging, drones can
affordably access areas not easily reached by
land. In the past, biologists like Johnston had to
fly in small planes or helicopters to get satellite
pictures of wild animals. These methods are
expensive and potentially dangerous. With
drones, scientists can stay safe on land or a boat
and fly the machinery across dangerous terrain
to reach animals.
Drones are modernizing wildlife conservation
by providing an eye in the sky to change the
way society currently addresses poaching and
research. Conservation groups can use drones
as powerful tools to protect endangered species
from illegal poachers with thermal and nightvision sensors. Drones also allow scientists
to collect data on these animals and observe
their behavior to recognize hunting patterns or
malnutrition. Drones bridge the gap between
technology and nature and shed light on how
technology can be an advantageous tool to
protect the world’s most valuable and unique
species.

Our Interview With

PureSpinach

Exclusive Interviews

How did you come up with the concept of ride back about our love and appreciation faced by growers in the greenhouse, from
PureSpinach?
for food and connected immediately.
providing them with harvesting and
seeding equipment designed specifically
Serdar: When we both came to Johnson, When was the moment you both decided for baby leaf spinach to solutions that
we were two guys coming from different you could pursue this as a serious business control the environmental parameters in
places brought together by our love and venture?
the greenhouse for successful growing and
frustration for food. Spinach is my favorite
maximizing yields.
leafy green, and if we want to go out and Serdar: That is a very hard question actually.
buy good spinach, we can go to a farmer’s We got into a product which we did not I recall from your pitch that the price of
market, but they only have fresh spinach a know was economically and technically spinach is going to be relatively similar to
few months of the year. For the rest of the viable because the product is not on the what other brands are on the market. Is it
year, you can go to a supermarket, but then market. So for the last year and half, we have a costly process? Would there be a loss?
the product is compromised. It has to be been working on our idea and it has been Would you still be able to make a profit?
shipped from California and is washed in a battle of “are we there yet,” and asking
chlorine solution before packaging. At that when we are going to hit the milestone of Serdar: No, it is certainty profitable. In
point the spinach no longer has the same being able to say that we are a profitable terms of technology we are there. The whole
fresh flavor and texture. We were surprised, and sustainable business. I am glad to say point of launching a pilot product in Ithaca
as the United States is a place with an that we are definitely there right now, and is to figure out all those numbers and make
abundance of products but not necessarily we have made our way through uncharted our business plan. So we will still price it
fresh produce year-round. That is when we territory.
at organic package spinach price which
decided this is a problem we wanted to work
sells for about $3.99 at Greenstar. This also
on. We started working on this product with Ziad: The lines are blurry, but I believe that makes us happy because we don’t have to be
Cornell researchers in the Plant Science you must have faith in both the product and “premium” and can be accessible to people
department.
the team. When I saw both the consumers’ who just like organic.
and retailers’ reaction after sampling our
Is this your first entrepreneurial spinach and their interest in our product,
experience?
I knew we were on to something. If he How do you plan to turn this into a scaled
were selling recyclable toilet paper with his business, and what do you envision for
Serdar: I come from an entrepreneurial vision, my faith would be in him.
PureSpinach in the future?
background where I started my career in
my family’s business in Turkey, dealing Were you told about this hydroponic Serdar: We plan to turn this into a scaled
with solid fuels and consumer packaged process by Cornell plant science business by being present in as many
goods. Before I moved here, I was working researchers, or did you go to them with cities as possible by operating our own
on a robotics startup in Turkey where we your own research?
greenhouses or partnering with existing
developed an industrial packaging company.
greenhouses. We met with FreshDirect
I decided to come to the U.S. to pursue Serdar: No, we saw hydroponic spinach in recently and are finalizing the paperwork
my MBA for both political and economic the greenhouses; there was a research being to have our product sold on their website.
reasons relating to my home country. But done at Kenneth Post Labs at the time. I We are also in talks with other retailers in
greater than that, I felt like it was the right became genuinely very curious about all the New York. So that’s what we want to do:
time for me to look into other opportunities crops. And that is how we got into it.
have a small-scale production in New York
because I knew I wanted to get out of the
City soon. Get our brand out there and start
industrial products industry and into the And going off that, how do you plan to working on building our big facility.
consumer products realm. I love food, and continue developing the technology that
I had a burger pop-up in Istanbul which you use for growing your spinach, and Where will the facility be? Would it be in
was a good gateway for me to get into food what prevents competitors from copying New York?
manufacturing.
your methods?
Serdar: It would be ideally outside of the city.
How did you both meet?
Serdar: So what we have is a recipe for We would look in locations in Long Island
growing spinach sustainably, continuously, or Hudson Valley. So we are still keeping
Ziad: Actually, it is a funny story; we met and profitably within our fields. What we our promise of fresh grown spinach.
during orientation. Serdar and I were didn’t have when we started was the full
coming back from New York City from a scale process. As we move forward, we What opportunities or resources has
trip, and we had a conversation the entire will continue to find solutions to problems Cornell provided that have been helpful?

Page 25

Exclusive Interviews

Serdar: We got into e-Lab which has been
excellent; it has different resources and
professors to guide us through the venture.
We treat it as though the professors are
investors requesting something, and that
we have to meet those deadlines. Going
back to your question, I think the biggest
challenge right now is finding the right type
of investor. We emphasize people a lot; we
really love and respect the people we work
with, and we would look for that in our
investors as well.
Have you ever thought about Shark Tank?
Serdar: Someone told us about this, but we
haven’t. Do we need to waste a lot of time
pitching this, or could we be marketing our
business that is up and running?
For the future of PureSpinach, do you
intend to only focus on Spinach? There
are other vegetables in the US that are
consumed at higher rates, such as lettuce,
potatoes, tomatoes, why spinach?
Serdar: Spinach is our favorite leafy green,
and I always say spinach is America’s
favorite leafy green. People who love
spinach are really set on it, and they don’t
want to substitute it with anything else.
We want to target those people with the
best spinach in the world. We expand after
this to another spinach product: spinach
pesto, spinach dressing, etc. We want to
be a spinach brand, not a farm that makes
anything that our customers demand.
For someone who is used to having
spinach in salads or smoothies, how
will they know that it’s “PureSpinach”
spinach?
Ziad: Specifically, for people who are used
to having spinach in salads or smoothies,
they will taste the difference. During our
consumer research phase, we used to go to
Wegmans and casually interview people.
Peoples’ responses would range from
those who would tell you they would pay a
premium to get good spinach that is local,
pesticide free, and available year round to

people that said, “It’s just spinach, bro."
When you get those people to try it, and
they see the difference in taste, that’s the
moment they say, “This is what spinach
should taste like, but that [packaged
spinach] is what we are used to eating.”

for what you want and continuing in order
to get where you want to be.

So you somewhat touched on your
marketing strategy, which includes getting
people to taste the product and to realize
that you have a much better product. How
do you, in a more general sense, plan to
have those people relate fresh spinach to
PureSpinach immediately?

Serdar: For me it was for a lot of reasons.
I just need to take some time off to think
critically about who I am and what I want
to do in life and to find a piece of work that
I’ll be happy to do for a long time.

Serdar: I think the simplest advantage for
us is freedom from weather constraints.
When you go into GreenStar, and they have
a sign that says “due to a mildew issue in
California we do not know when we will
be getting our next organic spinach,” the
shelf is empty. Putting PureSpinach in that
area, people will start to equate it to local
spinach, and after trying the flavor will be
hooked.
Any advice you have to any aspiring
entrepreneurs here on campus?
Serdar: Talk to a lot of people. Cornell is
an amazing place with amazing people and
has a great entrepreneurial culture. But
before getting into any venture, my advice
would be to find the people knowledgeable
about what you want to do, who love
surrounding themselves with new ideas,
and make friends with them. I think the
first pillar of getting something started is
to get other people excited about your idea
and what you want to do. If you can sell the
idea to people who actually know about
the industry and the product you want to
get into, then it’s just much easier since
you have more supporters. It’s really about
spending time with people and building
relationships.
Ziad: I think knocking on the door, picking
up the phone, and sending an email. I feel
that the biggest barrier for people is that
they think people won’t be responsive. We
had a lot of perseverance, I don’t want to
say it’s stubbornness, but it’s really fighting

Page 26

Just out of curiosity, if you guys weren’t
working on PureSpinach, what would you
have done with your MBA?

Ziad: I was working for 8 years in finance,
and I realized how quickly time passes.
It was a job and I wanted something
more than a job. So for me it was selfactualization, a soul-searching type thing. I
feel that coming to an MBA here gives you
the opportunity to properly search, and
I think that was what I wanted. I missed
being in an environment where I can get
challenged on something not related to the
capital markets or retail banks. That’s why
I believe school was the only opportunity
for me to better develop and break out from
my routine.
As an undergraduate, it’s becoming a trend
that everyone tries to work for the bulge
bracket banks. I feel like that curiosity and
that exploration in the entrepreneurial
spirit is sometimes missing.
Ziad: Even here, I believe that this rat race
exists and it’s great to develop people skills;
I mean, if it wasn’t for my job for 8 years, I
don’t think I would have the skill set. And
again, it’s about finding the right people, as
you won’t find people like Serdar everyday.
It’s really tough to be entrepreneurs in
the right environment. Everyone has
different interests, different needs, different
priorities, and some can’t be entrepreneurs.
They can’t take that risk. The experiences
you will get as an undergrad, the corporate
jobs, are great, but that’s where you have to
stop and get a higher degree.

Robert F.

Cornell Entrepreneur of the Year 2017

Exclusive Interviews

Entrepreneurship in this country has in
many ways become institutionalized by
(if not endemic to) university campuses
like at Cornell with eHub. As someone
who did not pursue the entrepreneurship
path until years out of school, do you
think that these changes are essential
to the creation of a new generation of
entrepreneurs or serve as distractions to
driven students?
These programs are definitely helpful
and can help push some of our brightest
entrepreneurial minds in the right direction
by offering the right resources, support,
and counsel. Having institutionalized
entrepreneurship programs can help the
right individuals learn some of the lessons
of entrepreneurship in a faster and more
effective manner.
This is the moment to become an
entrepreneur. We live in a unique time
in history; for the first time, opportunity
can be created without inheriting massive
amounts of capital, without ownership of
land or natural resources or even people.
For the first time, wealth can be created
through the power of one’s mind, thoughts
and ideas—developed, monetized, and
instantaneously distributed across the
globe. Intellectual property has become
the new currency of business and finance,
and the promise of brainpower to move
individuals, families, and communities
from poverty to prosperity has never been
more possible. We need entrepreneurs to
harness this power and create jobs.
As you have progressed from a budding

entrepreneur to a private equity titan,
how has your involvement in your own
business changed? Furthermore, what
unforeseen challenges have you faced in
recent years as a CEO?
We built Vista for scale. We have taken
lessons from what we have learned about
running software companies and captured
them in 100+ Vista’s Best Practices. While
a small team and I were testing and honing
these practices in the beginning, we now
have a team of nearly 200 technical experts
focused exclusively on supporting our
portfolio companies adopt best practices
and create value.

This is the moment
to become an
entrepreneur.

I like to think of Vista as a software
company – the 4th largest when our
portfolio companies are taken together –

Page 29

in a private equity wrapper. The challenge
I face as a CEO every day, as do the CEOs
of our software companies, is finding the
best talent. There are over 2,700 open jobs
across the Vista ecosystem. We are looking
for people with technology skills who we
can train. This is precisely why on-ramping
African-Americans and women into our
technology economy is such a priority in
my philanthropy; the jobs are there if they
have the skills and opportunity to access
them.
Recently, through your personal
contribution and the Fund II Foundation,
The Robert Frederick Smith Tech
Scholars Program was launched to
provide scholarships and fellowships to
underrepresented minority and female
students. In an ideal world, what kind
of impact would you like this program
to make, both here at Cornell and in the
United States as a whole?
I want these programs to create access and
opportunity for minorities and women
to access jobs and become leaders in
the technology economy. Technology is
changing almost every facet of the way
we do our jobs and live our lives. It is not
only important to have the necessary
skills, it’s also critical for students to have
the infrastructure of support and mentors
around you. We can do this by producing
a critical mass of job-ready minorities and
women. I expect these scholars will live up
to their potential and their responsibility
to create opportunities for others, serve
as mentors, and lead as role models for
legions more minorities and women.

"
Exclusive Interviews

Teaching the entrepreneurial spirit of asking tough
questions, constantly learning, demanding excellence, taking
calculated risks, and bouncing back from setbacks are all
part of Cornell’s curriculum and should continue to be.
We need to harness the full power of the
American workforce and their creativity
and technology and provide the most
adept platform for this to happen. We
need to harness the full power of the
American workforce and their creativity,
and technology provides the most adept
platform for this to happen.
What are specific endeavors universities
like Cornell can implement to further
increase and instill entrepreneurship?
My definition of entrepreneurship does not
mean just starting a company. Not everyone
should start their own business, but
everyone should be entrepreneurial about
their careers. Teaching the entrepreneurial
spirit of asking tough questions, constantly
learning, demanding excellence, taking
calculated risks, and bouncing back from
setbacks are all part of Cornell’s curriculum
and should continue to be.
Moving from an investment banking
position at Goldman Sachs to taking
a leap of faith to start your own private
equity firm, what’s your advice to aspiring
entrepreneurs to decide to listen to your
gut versus other people’s opinions?
I often remind my children of the three
words that resonated with me in my early
years in college, at Goldman Sachs, and
when I made the decision to go out on
my own: “You Are Enough.” In essence,
this means that everyone should find their
destiny. My advice to aspiring entrepreneurs
is to find their courage, conviction and
resolve.

What do you think are the next steps with
Artificial Intelligence? What roles will
investors like yourself play with Artificial
Intelligence?
All industries are being transformed by
Artificial Intelligence today. The future is
already here. I was recently the moderator
on the Artificial Intelligence panel at this
year’s World Economic Forum in Davos. I
was joined by the CEO of Microsoft, Satya
Nadella; the CEO of IBM, Ginni Rometty;
the Founder and CEO of Healthtap, Ron
Gutman; and Joi Ito of the MIT Media Lab.
It was a fascinating discussion. There was
a common understanding that we need
to invest in cognitive solutions that are
designed to enhance human intelligence,
not replace it. We also discussed the
need to agree to a set of principles for
transparency and trust to manage the
ethical considerations related to AI in order
to protect privacy and the dignity of work.
There was also a clear recognition that
we could use AI to increase productivity
in education systems. The same effort
being devoted to AI in enterprise and
consumer applications should be directed
to AI in education systems to help create
more opportunities and avert accelerating
income disparities.
Do you think young talent’s fixation on
prestigious startups is to the detriment of
technological advancement and industry
innovation?
There’s definitely a glamor around tech
startups, but the vast majority of younger

Page 30

people I have worked with and meet are
mission-focused and care about working
at a place that merges values and value.
We should really push back against this
cliché that everyone wants to move to
Silicon Valley to start the next billion dollar
company. Young people are smart enough
to realize that these are one in-a-million
ideas, and while they do of course want
to earn a good living and support their
families, this is a very community-focused
and serious-minded generation for the
most part.
There is a common opinion that the most
lucrative careers are not necessarily the
most beneficial to society. Do you think
your social impact could have been as
large had you pursued a career in the
sciences or engineering?
I don’t agree. Lucrative careers can create
jobs, contribute to GDP and unleash a level
of productivity that raises the standard of
living for everyone. The social impact that
I have achieved – through my business and
my philanthropy – is precisely because I
am an engineer. Once an engineer always
an engineer. My joy of figuring things out,
taking risks, and finding elegant solutions
to complex problems has allowed me to
deliver social impact and consistent returns.
I take a similar approach to philanthropy
– figuring out how to scale programs and
innovations that work is the perfect role for
an engineer.

Do you think there are any resources or
experiences at Cornell that helped form
your marketing role in your life?
I graduated in 1997, majoring in
Economics and Communication. I was
really fortunate that I was in Human
Ecology and took a lot of courses in the
Agriculture School, as the Internet was just
in its beginning state. We were one of the
first colleges to have access to email and
a search engine. I think the technological
advancements of Cornell opened up a
unique opportunity to me. A lot of folks
who shared similar interests as me at other

colleges went into ad agencies, PR, or the
publishing world. Cornell introduced me
to the fact that the Internet was going to be
this new aggressive channel. Now 20 years
later, I can say that I’ve have had a 20-year
career in this field that has revolutionized
everyone’s lives.
In addition, one of the branding classes
I took at Cornell really opened my eyes
on the importance of perception. That
class taught me that it’s not just the
product you have, but how you talk about
it and position it. I felt that class and all
of the communication classes I took

Page 31

were incredibly valuable and really laid
the foundation for how I approached
marketing.
How do you think Cornell can improve
on its brand?
You always hear about Stanford and how
technologically advanced it is or Harvard
and its prestigious brand. If you think
about most of the Ivy League and top-tier
schools, Cornell lets itself be somewhere
in the middle of that continuum. You
don’t hear stories like mine, about what I
got from Cornell, often. Cornell’s culture

Eva

Papoutsakis Smith
Page 32

Exclusive Interviews

has historically been to keep your head
down, work hard, and stay focused. But
unfortunately, it’s not enough to work
hard. Someone needs to know you are both
working and making progress, otherwise
you won’t get credit. I think Cornell has
been too reserved and humble for its own
good in terms of branding.
One book that I read on branding is called
“Lovemarks,” and it's about the fact that
in this day and age it’s not enough to
just provide a service. You have to make
the consumer love you and the service
you provide. How do you transcend just
having a utility and reach consumers’
emotions? That is what Cornell really
needs to figure out: how it will instill that
internal community and pride.
What has been your most significant
barrier in female leadership?
I think of myself as quite fortunate
because I’ve had really strong female
mentors at every stage in my career that

command respect while still being true to
myself.
As I went through my career, I found
people that were where I wanted to go.
When I had children, I found myself
gravitating towards mentors who also had
children. These people helped me navigate
different issues, such as “how do you get
through being pregnant without being
labeled as someone who’s not going to
come back to the workplace?” and “how
do you get through the first few years of
your children's lives, which are really
hectic and require flexibility, but also tend
to coincide with some of the most critical
years in your career development?”
I am also incredibly fortunate to have a
husband who is both a true partner and
a feminist. We split the responsibilities
at home equally. There is no feeling that
if I go on a business trip things won’t be
taken care of at home. Who you choose as
your partner is so critical in life. Having
a partner that recognizes the biases you

modeled, and been a famous singer. She
threw all the rules out the window that a
woman needs to be tall and skinny and
white in order to act, model, and succeed.
I connected to her in that I felt different,
didn’t fit into this mold for achieving the
things that I wanted, but was going to do
all I could to do it anyway. I wrote about
how she inspired me to keep my wild
curls, be the loud Greek woman, be funny,
warm, yet tough and approach things my
own way. And maybe in turn, I’ll pass it
forward, cut through for someone who
feels similarly, and make someone think
twice about conforming versus being okay
with standing out. I think people gravitate
towards unique people that define their
own path, at least I do.
Does work life balance really exist for
women?
Does it really exist for anyone? I think it
depends on your definition of having it
all. Are you going to be the perfect stayat-home mom and at the same time the

One woman I look at, someone who really inspired me, is Queen
Latifah. My Harvard application essay on the business professional
that inspired me most was on her. She’s my inspiration because if you
play by someone else’s rules you are never going to win.
really prepared me for any challenges. A
lot of people don’t realize there might be
some discrimination. They might have to
deal with inappropriate advances, or their
ability to have children might put them
on the mommy track. They proceed into
that environment and have to deal with
the sudden realization that these systemic
issues are going on and have to figure out
how to deal with them.
This is something that Cornell has taught
me: the power of mentorship, of working
with people who have walked the path
before you. Even though I had to go
through it, I felt so fortunate that I was
prepared for it. I had people that spoke
to me on how to navigate this, how to
proceed through my career, and how to

face, respects you, and advocates for you
has been really huge in my ability to be
a woman, executive, mom, and wife and
somehow make that all work.
Can you speak about the women who
have inspired you and why?
There are so many women that inspire me.
But one woman I look at, someone who
really inspired me, is Queen Latifah. My
Harvard application essay on the business
professional that inspired me most was on
her. She’s my inspiration because she made
me realize that if you play by someone else’s
rules you are never going to win. She came
from a poor background, her sexuality was
always questioned, and she is overweight.
Yet she has starred in a ton of movies,

Page 33

perfect CEO while doing everything else?
You are setting yourself up to fail if you
think you’re going to be perfect across
all those things. I believe that men and
women can take a step back and think
about what’s important to them and
what’s going to make them feel happy and
fulfilled. Focus on your own definition of
success and how to achieve it. Also, perfect
is highly over-rated.
You have been in the industry for 20
years. What are the greatest challenges
facing women in the workplace?
I think the biggest challenge today really
comes down to unconscious bias. It is great
that we are having conversations about
women and that they are at the forefront.

Exclusive Interviews

For the next steps in relation to equality,
there need to be more examples of women
in powerful roles so people don’t always
think of the authority figure as male. The
school shouldn’t default to calling the
mom first. Men should take time off for
childcare without being judged at work.
Until the default mental pictures change,
there is still work to do.
Did you always want to do Marketing
and Sales? How has the industry changed
from the beginning of your career to
now?
I knew I wanted to be involved in
marketing, but I didn’t always know that I
wanted to be involved with the sales side.
I discovered that I got more excited about
servicing individuals in a consultative way
to further their brand rather than being
the holistic owner of the brand. It provided
more variety and intellectual stimulation,
and I discovered that I loved the selling
aspect of it.
The number one change has been the
introduction of richer data analytics
and how much you can do in terms of
marketing to cater to the end consumer. I’ve
focused my career on new communication
channels, new technological applications,
and the data both provide through
their increased accessibility to the end
consumer.
Do you think social media is a good
marketing tactic?
Absolutely. When I was younger, if you
wanted to be famous, you would go
to Broadway or Hollywood. Now you
have people everywhere that have made
their own brand because of Snapchat,
Facebook, YouTube, and Pinterest. This
has completely disrupted how people
think about brand creation. And now
you’re seeing the influencers who have
developed their own brand are starting to
impact traditional marketing. If you really
think about it, what it really meant to be
famous was first within print, then on film,
then television, then the Internet. I do
believe social media, even more than just the
“Internet,” is really what allowed that shift.

My own purchase behavior is influenced
much less by traditional channels now,
largely replaced by the social elements of
the Internet. Reviews and how consumers
research have had a massive impact on
how people approach purchasing and
branding. This is really about reaching
beyond a product’s utility and making
an emotional impression. And I think
this disruption of social media is only in
its beginning phase. Things like in-home
and in-store connectivity and artificial
intelligence have begun to, and will
continue to, disrupt the industry.
Do you think there are any downsides to
social media?
Yes, I do think there are downsides.
Whether it’s concerns about security,
the pressures that social media put on
curating yourself in a certain way, or the
focus on marketing and branding and
commercialization, I think those all can
be downsides, but it’s like anything else.
It’s this idea of knowing that there are a lot
of opportunities that can also be abused if
you aren’t careful. It’s a powerful platform
that should command our respect but also
requires significant responsibility.
We wanted to ask you about how some
experts have called into question the
importance of having an MBA, given
that you received your MBA. Do
you think that it supplemented your
Cornell education? And what did your
MBA teach you that you couldn’t learn
elsewhere?
I think, for me, the MBA absolutely helped.
It gave me a broader worldview, exposing
me to a lot of people from a lot of places.
I did a tremendous amount of travelling.
It opened my eyes to methods of business
that I hadn’t been exposed to before. So
I found it incredibly valuable. I think it's
opened a lot of doors for me.
How long did you wait after you
graduated from Cornell to get your
MBA?
Four years. I got four years of experience

Page 34

and then I went and got my MBA.
A lot of my friends talk about when is
a good time for us to get our MBA and
that it’s always recommended that you
get some work experience. What do you
think?
I think of it as highly personal because if
you end up being fortunate enough after
graduation to work at the next Facebook,
or Pinterest, or Google, then absolutely
don’t leave that opportunity. Get all the
experience you can. For me personally,
four years was something that I had in
the back of my head, but also a really big
recession coincided with my MBA. A lot
of my friends were getting laid off. Right
after I started my MBA, 9/11 happened.
So for me, it made sense. There was a
natural lull, and I knew this was a good
time to improve my skill set and expand
my network. But if I had been at a startup
that had a lot of potential or the economy
was much stronger, I might’ve postponed
it. Going full circle, you aren’t going to
succeed if you follow someone else’s rules.
You really need to figure out how to make
it work for you.
If you could give Cornell students any
piece of advice on creating their personal
brand, what would it be?
Always create your brand through the
value that you’re providing to somebody
else. Figure out what you’re really good
at. That will create a sustainable brand.
If it is gimmicky or based on a cult of
personality, the brand just isn’t going to
have the ability to endure. I also personally
don’t think it's going to be as fulfilling for
you as an individual. It kind of goes hand
in hand with what you want to do. People
tend to focus on what they’re not good at,
but if you figure out what you’re good at, it
will give you energy. It's easier to get better
at what you’re good at than to overcome
what you’re bad at. So if you can figure out
what that strength is and how to leverage
that to drive value and solve problems,
you’re going to have a brand that is both
externally very popular and internally
very fulfilling.

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